LOCATION, LOCATION, LOCATION, EXPERIENCE, EMPLOYMENT

Our headline amends a familiar phrase slightly, to lay out the three factors impacting Inland Real Estate Brokerage's multifamily division. Yesterday, we stopped by the firm's Oak Brook office to ask John Hanson and Richard Kehoe and about a sector that’s seen its prices fall 20% since ’06.

Inland has reduced its ownership of apartment units from a high of 40k, Richard says, to focus on the brokerage of buildings. They say it's still a good time to invest in the best locations, and they recently sold a two-building portfolio in Arlington Heights—for about an ’03 price. (You remember '03: Prices were lower, more realistic, not as low as '99, and Outkast's "Hey Ya" topped the charts.) But they’ve seen less movement in out-of-the-way locations. Once employment comes back, they say, apartments will be one of the first asset classes to recover, since the NOI is stable, and most investors understand how it translates to income.

John has worked in multifamily at Inland since 1996 and Richard started there in 1985, but both say this recession compares to no other. While REITs are still investing in larger properties throughout the Midwest, private investors are dwindling and as a result, six-flats (of which Inland has moved hundreds since the ‘80s) are barely selling. Richard also says buildings with a lot of one-bedrooms aren't selling as fast because younger professionals who have lost their jobs, or aren't getting raises as quickly, are moving back home or taking roommates. Check your basements, everyone. Whoever's down there might be stalling a multifamily recovery.